Market volatility has cast a pall of uncertainty over bond prices as return expectations may rise...
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Market volatility has cast a pall of uncertainty over bond prices as return expectations may rise or fall. For example, you are looking at a $5,000 face value bond by issued by Belco with 7 years until maturity, a coupon of 7.0% paid semiannually, and currently trading with a 5.25% YTM. You've already determined that the current price of the bond is $5,507.08; and that the duration of the bond is 5.73 years. Using the modified duration for your calculation, what is the estimated new price of the bond if overall market return expectations rise by 3%? $4,819.50 $5,622.25 $5,911.10 $4,585.33 $4,233.67 Market volatility has cast a pall of uncertainty over bond prices as return expectations may rise or fall. For example, you are looking at a $5,000 face value bond by issued by Belco with 7 years until maturity, a coupon of 7.0% paid semiannually, and currently trading with a 5.25% YTM. You've already determined that the current price of the bond is $5,507.08; and that the duration of the bond is 5.73 years. Using the modified duration for your calculation, what is the estimated new price of the bond if overall market return expectations rise by 3%? $4,819.50 $5,622.25 $5,911.10 $4,585.33 $4,233.67
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Related Book For
Financial Accounting: A Business Process Approach
ISBN: 978-0136115274
3rd edition
Authors: Jane L. Reimers
Posted Date:
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